British Retail Consortium

BRC calls for domestic appliance scrappage scheme


Source: British Retail Consortium

VAT should be removed entirely from energy efficient appliances and a car-industry-style scrappage scheme considered. This would help households cut their fuel bills by switching to low emissions-generating products. As the Chancellor begins drafting this autumn's Pre-Budget Report (PBR), the British Retail Consortium (BRC) is today (Monday) writing to Alistair Darling setting out its priorities for A Balanced Approach to Sustainable Recovery.

The BRC's plan for creating incentives for households to improve their energy efficiency is one of a set of proposals in the document. They are designed to support retail jobs and job creation, revive high streets and promote retail investment - as well as tackle climate change and reduce customers' fuel costs.

In its submission to the Chancellor, the BRC says, 'A clear signal should be given to households of the benefits of a switch to the most energy efficient products…..this could be kick started through time-limited scrappage schemes for those buying ‘Energy Saving Recommended' products.'

Independent economic modelling for the BRC indicates CO2 emissions could be reduced by 1.3 million tonnes each year by 2020 as a result of removing VAT from today's most energy efficient equipment. That is almost one per cent of domestic emissions. But the move would take reductions beyond that as manufacturers further develop technology and compete for the ‘Energy Saving Recommended' performance standard and the competitive advantage of zero VAT.

The reform would cost GBP507 million per year in lost VAT receipts. This is roughly equal to the cost over just two weeks of the, across-the-board, VAT reduction introduced last December.

Stephen Robertson, British Retail Consortium Director General, said: 'The Government's working against its own objectives when it sets targets for reducing carbon emissions while charging full VAT on the efficient products that will move us towards those targets.

'Retailers are already doing their bit to cut carbon but homes are responsible for 27 per cent of the nation's emissions. Helping householders improve their performance has to be the next step.

'A modern, efficient fridge-freezer uses less than half the energy of a 1995 model. Over its lifetime it can pay for itself but having to find the cost up front puts customers off upgrading - particularly in a recession.

'Removing VAT and exploring the possibility of a scrappage scheme would do a lot to get old energy and water-squandering appliances out of people's homes.'

The EU Commission has failed to progress its proposals for VAT concessions for energy efficient and energy saving products. That means they are subject to full standard rate VAT (due to be 17.5 per cent from 1 January 2010).

In the UK there are 15 million fridges, freezers and washing machines over ten years old.

Other key proposals in the BRC's Pre-Budget Report submission to the Chancellor include:

Jobs and Skills
The 0.5 per cent increase in employers' and employees' National Insurance contributions, planned for 2011, is a tax on jobs. It should be dropped.

Next year's National Minimum Wage increase should be no more than one per cent. The best protection for earnings is allowing employers to keep people in work, not piling on new costs. One in five retail staff is under 21, so retail jobs are vital to stemming further youth unemployment.

Property versus people
Business Rates must be affordable and not add to food inflation and job losses. Business Rate Supplements must not exceed the likely value of the benefit retailers will receive.

High Streets
Government must provide the right policy framework to support high streets. For example, by backing transport and delivery regimes that work as a service to customers and businesses. Workplace parking charges should be dropped.

Retail Investment
The Government should provide early confirmation that the 40 per cent capital allowance for firms investing over GBP50,000 in qualifying plant and machinery will be extended beyond the current first-year and apply to a wider range of investment, including fixtures and fittings.

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